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M&T Bank: Financial Winner

NEW YORK (
TheStreet) --
M&T Bank(MTB - Get Report) of Buffalo, N.Y., was the winner among large U.S. banks on Wednesday, with shares rising 1.7% to close at $114.64.

The broad indices ended lower, after the Federal Open Market Committee (FOMC), as expected, made no change to the Federal Reserve's "QE3" stimulus policy. The
KBW Bank Index(I:BKX) was down 0.2% to 64.93, with the 24 index components evenly split between winners and losers.

The Fed has been making monthly net purchases of $45 billion in long-term U.S. Treasury securities and $40 billion in long-term agency mortgage-backed securities since September 2012, in an attempt to hold down long-term interest rates. The FOMC on Wednesday made hardly any changes in its statement on from the September statement.

The Fed's main policy tool is the short-term federal funds rate, which has remained in a target range of zero to 0.25% since late 2008. The FOMC has repeatedly said it expects "this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored."

The Department of Labor last week said the U.S. unemployment rate in September improved slightly to 7.2% from 7.3% in August. The FOMC on Wednesday said "Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable."

Sterne Agee chief economist Lindsey Piegza had an interesting reaction to the FOMC's statement that the labor market has "shown some improvement: "Really? The unemployment rate has declined from 8.1 to 7.3% in part because the participation rate continues to wane but more importantly, job creation has slowed from +200k to just +140k a month on average."

Piegza in a note to clients following the FOMC statement release wrote that one of the major challenges to the Fed is to make it clear to the market that the eventual end to the "QE3" bond purchases does not mean the central bank will also raise short-term rates.